Analysis: So what actually is a “swap” again?

The SEC and CFTC have together finally produced and agreed definitions of a swap but, as Galen Stops writes, the answer is far from clear.

It seems that the industry can now breathe a sigh of relief,
firms can blow the dust off their SEF application forms and
everyone can begin preparing for the swaps regulation that has
been lurking on the horizon for some time now.

Except that there currently seems to be one tiny spanner in
the works that threatens to prevent this stately procession
towards a fair, safe and orderly swap market.

This detail, which appears to have been overlooked in the
documents released by the CFTC following their approval of the
new rules, is none other than the actual definition of a
'swap’.

While hopefully the apparently labyrinthine 600 page
document containing the full details of the rules approved by
the two respective Commissions will contain a definition of a
swap, at the time of writing this has yet to be published yet
and it seems somewhat unusual that there is no indication of
what this definition might be in the final rules released so
far.

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